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Editor’s Note: Last week in TradeSmith Daily, I shared two trends to invest in and one to avoid for the rest of 2023. One of those trends is travel, a topic that Derby City Insights Senior Analyst Andy Swan found some incredible data on. In today’s issue, I’m going to share a report Andy recently published on one travel stock worthy of being on your moneymaking radar.
A few years ago, as consumers weathered the pandemic and conserved cash, the “staycation” was all the rage.
People spent money on their homes — great furniture, gigantic TVs, high-powered entertainment systems, and in-ground pools — and enjoyed their vacations in place.
Fast-forward a few years to today…
Americans are weary of “vacationing in place.” But the inflation conflagration of the last few years has supercharged costs. So Americans are stuffing more fun into shorter time frames.
The “micro-cation” is all the rage.
It’s hot. White hot.
I’m sharing this for a reason: It’s one of the secrets to winning stock picking.
If you can lock onto hot new trends when they show up on Main Street, you can reap the windfalls when Wall Street finally gets wise.
That’s the essence of our investing “edge,” and our secret weapon for targeting moneymaking events before they happen.
We’re going share that “edge” here today to help you cash in on the hot, new “micro-cation” trend.
A New Kind of VacationAfter a strangulating two-year stretch, the travel industry rocketed out of the gate this year.
Summer vacation spending is forecast to hit an all-time high of $214.1 billion in 2023. Shorter-but-richer trips — those “micro-cations” — are on the rise.
Heck, travelers are dropping an average of $622 for single-night stayovers.
And some hoteliers are adapting — while others will get left behind.
So-called “generic” lodging players will struggle at a juncture when travelers are packing more into shorter stays.
And some of the coolest stayover innovations are already arriving…
- The “Smart Hotel”
- The Sustainable Stay
- Robot Staffs
- Virtual and/or Augmented Reality
- The Birth of “Super Brand” Experiences
The takeaway: In the hotel biz — like in any industry — the innovators will win, while the “also-rans” will get left behind.
So let’s “check in” with this market leader…
The Ultimate Travel StockThat leader is Marriott International Inc. (MAR), the lodging giant whose brand-new corporate headquarters is down in Bethesda, Maryland — not too far from TradeSmith’s corporate base in Baltimore.
Marriott’s genesis was all the way back in 1927, when John Willard Marriott and his wife, Alice, opened a root beer stand in Washington. In 1993, Marriott Corp. split into two firms — property owner Host Marriott (now Host Hotels & Resorts), and Marriott International.
Today, Marriott is the world’s No. 1 hotel chain — as measured by available rooms. It has 31 brands in its portfolio ranging from the luxurious Ritz-Carlton to the budget-friendly Fairfield Inn & Suites.
We’re talking 8,500 properties containing over one million rooms across 138 countries and territories.
This diversity gives Marriott a competitive edge.
And our LikeFolio research shows that Marriott is hot — red hot.
Consumer buzz levels for Marriott have shot up by a whopping 30% year-over-year, as of this writing.
But even more telling is that Purchase Intent mentions — consumers talking about spending their hard-earned cash with Marriott — have more than doubled over the same time frame, zooming 115%.
This surge spotlights a big jump in consumer interest in Marriott as a destination, which should translate into surging bookings and revenue growth for the company.
Our proprietary Purchase Intent metric has been proven through rigorous academic research by Georgetown University as “not only predictive of a company’s upcoming sales, but also [to] account for the unexpected component of sales growth that analysts miss.”
Riding the Travel WaveWith that massive upswing in travel — those record-breaking levels we’re hitting this year — hotel-stay numbers will skyrocket.
And as one of the sector’s true top dogs, Marriott will benefit more than most.
Travel stocks are charging higher along with the peak summer vacation season.
And Marriott is really surging: The company’s shares recently hit a new 52-week high of $206.53, up 29% from where they traded a year ago, as of this writing.
The stock won’t stop there: We expect MAR to hit additional new highs — and to break out to as high as $220 per share by the end of the year.
Good things happen for smart companies.
Just this week, the company teamed up with MGM Resorts International (MGM) on a loyalty program that gives Marriott deeper access to the Las Vegas strip.
By the end of the year, the so-called MGM Collection with Marriott Bonvoy will make it possible for travelers to book rooms at 17 MGM resorts in Vegas and elsewhere via Marriott’s website.
Remember how we talked about the importance of branding, innovation, and “experiential” stayovers? Well, this new partnership will add roughly 40,000 rooms to Marriott’s system, increasing its global inventory by 2.4%. It’ll even give Marriott fees based on total room revenue.
“Las Vegas is not only one of the most important destinations in the US but also globally,” Marriott CEO Anthony Capuano told reporters. “Making the full breadth of MGM’s resort portfolio available to our customers is a really compelling proposition.”
Consumers seem to agree — with a flood of posters expressing their excitement over the collaboration.
For inventive companies, deals like this are de rigueur. And Marriott is an inventive company.
Add in splashes of technology and some of the big new industry trends, and our predictive A.I.-driven technology puts Marriott in clear bullish territory with a Social Heat Score of 82.
Our rule of thumb is that any stock registering a Social Heat Score over 70 is a buy.
That’s as clear a signal as any that this market leader could pay off big.